By Tim Bovy and Ian Hodges
Surveys from KPMG and EY present that the momentum behind realizing the long-term business advantages from a forward-thinking dedication to ESG is outpacing the parochial emphasis on short-term income, on yielding to shareholder strain, and on caving into anti-woke autocrats.
A survey of greater than 200 firms throughout Europe by EY and launched in March 2023[1] discovered that 76% of firms with robust ESG reporting in place had been optimistic about their monetary efficiency in contrast with 45% of firms with weaker controls.
“Based on the survey, 74% of all respondents say their firm ought to deal with environmental, social and governance (ESG) points, even when doing so reduces short-term monetary efficiency. Nonetheless, practically two-thirds of respondents (64%) additionally reported that short-term incomes strain from buyers was impeding their longer-term investments in sustainability. This means that regardless of the clear enterprise advantages of addressing ESG points, strain from short-sighted buyers stays a severe concern.”[2]
This strain to prioritize short-term earnings over securing a strong operational future is more likely to persist, and to realize prominence when governments such because the Trump administration within the US push again on the inexperienced transition, range fairness and inclusion (DEI), and anything that they regard as woke and restrictive to the free hand they really feel enterprise ought to have.
Regardless of this, a KPMG survey[3] has concluded that ESG reporting has develop into integral to virtually the entire world’s largest 250 firms and for a considerable portion of the highest 100 firms in 58 totally different nations. The important thing causes for this widespread adoption had been seen as getting forward of the introduction of obligatory reporting necessities, attracting ESG-motivated buyers, and managing the monetary implications on the enterprise of ESG-related points. This final level was seen as a key driver for the adoption of double materiality past the territoriality of the Company Sustainability Reporting Directive (CSRD). More and more ESG is seen not as an add-on however as an integral a part of long run enterprise success.
Greenwashing provides a shortcut to benefit from one of many company advantages of ESG, the willingness of customers to decide on a inexperienced choice, and even to pay a bit extra as a way to do this. It’s a cynical ploy however not an irrational one. Proof now suggests nearly all of folks in all nations of the world assist motion on local weather change[4] [5]. Whereas nearly all of greenwashing happens in advertising and marketing materials it may be present in all types of company communication.
In March a US sugar firm was accused of greenwashing and of deceiving customers and endangering public well being[6] and in April the UK Competitors and Markets Authority acquired new powers to behave on greenwashing claims[7]. B Corp certification has just lately responded to criticism that it facilitates greenwashing by revising its normal to “elevate the bar”[8].
With the elevated adoption of ESG reporting, the credibility and reliability of these reviews is extra vital than ever and the world over efforts are intensifying to name out greenwashing. The EU’s Directive on Empowering Customers for the Inexperienced Transition and the Inexperienced Claims Directive are examples, as is the UK’s transfer to strengthen the Digital Markets, Competitors and Customers Act 2024.
All of that is proof of the persevering with dedication to ESG by firms, governments and requirements our bodies and the popularity of its worth to society globally. In its promotion of stakeholder capitalism, the World Financial Discussion board (WEF) focuses upon long-term worth creation and ESG measures, in opposition to the Friedmanite mannequin’s emphasis on short-term revenue maximization.
We’re seeing this shift in direction of the advantages of ESG not solely within the EU, by its CSRD and Company Sustainability Due Diligence Directive (CSDDD) necessities, but additionally, for instance, within the United Arab Emirates the place the UAE Securities and Commodities Authority (SCA) has mandated sustainability reporting for public joint inventory firms listed within the Dubai Monetary Market (DFM) and the Abu Dhabi Securities Change (ADX), requiring them to publish an annual sustainability report, detailing their long- time period methods and the influence of their actions on the atmosphere, society, economic system, and governance, ideally in keeping with requirements just like the World Reporting Initiative (GRI).
This dedication to ESG contrasts markedly with the U.S. funding group the place corporations, together with Blackrock, are abandoning social and environmental engagement for concern of being accused of woke capitalism.[9] “Against this,” notes Michael Posner, “European governments are shifting ahead, spurred on by public calls for for authorities regulation of environmental and social norms globally. The U.S. funding group can both step up and embrace this necessary and well timed agenda or it would default this area to European regulators who additionally will set the usual for the biggest U.S. firms doing enterprise in Europe.”[10]
Because the surveys present, the momentum behind realizing the long-term business advantages from a forward-thinking dedication to ESG is outpacing the parochial emphasis on short-term income, on yielding to shareholder strain, and on caving into anti-woke autocrats.
Concerning the Authors
Tim Bovy has over 35 years of expertise in designing and implementing varied varieties of data and danger administration programs for main regulation corporations resembling Clifford Probability; and for worldwide accountancy corporations resembling Deloitte. He has additionally developed options for organisations resembling BT, Imperial Tobacco, Rio Tinto, the Kuwaiti authorities, The Royal Family, and the US Home of Representatives. Tim is an elected member of The Royal Institute of Worldwide Affairs, Chatham Home, an Impartial Suppose Tank primarily based in Central London, and holds a BA diploma, magna cum laude, from the College of Notre Dame, and MA and C.Phil levels from the College of California, Davis.
Ian Hodges has labored in a wide range of data administration roles over a twenty-year profession. He has designed and applied data and data administration programs at a nationwide scale, creating elements of the digital archive at The Nationwide Archives (UK). At a company degree he’s undertaken data administration initiatives with The Royal Family and Her Majesty’s Treasury. Ian additionally has data rights experience creating insurance policies and procedures for Freedom of Info and Knowledge Safety compliance and dealing as a Knowledge Safety Officer. Along with CISM, CIPP/E and CIPM certifications, Ian holds a BA diploma from the College of Southern Queensland, a postgraduate diploma from Deakin College, Melbourne and an MA from Birkbeck, College of London.
References
[1] Third annual EY Europe Lengthy-Tern Value and Company Governance Survey, https://www.ey.com/en_gl/insights/long-term-value/how-can-effective-governance-unlock-value-from-sustainability
[2] https://www.ey.com/en_gl/newsroom/2023/03/new-ey-survey-finds-critical-link-between-sustainability-governance-and-business-performance
[3] KPMG Survey of Sustainability Reporting 2024, https://kpmg.com/xx/en/our-insights/esg/the-move-to-mandatory-reporting.html
[4] Hannah Ritchie (2024) – “Extra folks care about local weather change than you assume” Printed on-line at OurWorldinData.org. Retrieved from: ‘https://ourworldindata.org/climate-change-support’
[5] Mark Hertsgaard and Kyle Pope, ‘A silent majority of the world’s folks desires stronger local weather motion. It’s time to get up’, The Guardian https://www.theguardian.com/atmosphere/commentisfree/2025/apr/23/climate-action-public-support
[6] Florida sugar firm’s environmental claims are ‘greenwashing’, lawsuit says, The Guardian, 5 March 2025, https://www.theguardian.com/us-news/2025/mar/05/florida-crystals-sugar-lawsuit
[7] UK drinks manufacturers face fines for greenwashing, The Spirits Enterprise, 8 April 2025, https://www.thespiritsbusiness.com/2025/04/uk-drinks-brands-face-fines-for-greenwashing/
[8] New B Corp guidelines unveiled after critics allege greenwashing, FT.com, 9 April 2025,
https://www.ft.com/content material/8667fd7d-3e3f-49ed-89a2-d0f11cb5a4d5
[9] Michael Posner, “How BlackRock Deserted Social And Environmental Engagement,” Forbes, Sep 04, 2024 out there at https://www.forbes.com/websites/michaelposner/2024/09/04/how-blackrock-abandoned-social-and-environmental-engagement/
[10] Please see footnote 8 above.
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